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VIRTUES OF BAD TIMES Interaction Between Productivity Growth and Economic Fluctuations

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Author Info
Aghion, Philippe
Saint-Paul, Gilles

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Abstract

We develop a model of optimal productivity growth underdemand fluctuations. We consider two alternative hypotheses. First,we assume that productivity growth is costly in terms of currentproduction. Second, we assume that the cost of productivityimprovements is independent of current production. It is shown that,in the first case, productivity improvements will be countercyclicalwhereas, in the second case, they will be procyclical. The model thenis used to study the impact of the frequency and amplitude offluctuations on long-run growth. The results corresponding to thefirst hypothesis are shown to be consistent with recent empiricalwork.

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Publisher Info
Article provided by Cambridge University Press in its journal Macroeconomic Dynamics.

Volume (Year): 2 (1998)
Issue (Month): 03 (September)
Pages: 322-344
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Handle: RePEc:cup:macdyn:v:2:y:1998:i:03:p:322-344_00

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  1. D Varvarigos, 2004. "Non-neutrality and Uncertainty in a Model of Growth," Centre for Growth and Business Cycle Research Discussion Paper Series 41, Economics, The Univeristy of Manchester. [Downloadable!]
  2. Massimo Caruso, 2002. "Procyclical Productivity and Output Growth in China: An Econometric Analysis," Open Economies Review, Springer, vol. 13(3), pages 251-274, July. [Downloadable!] (restricted)
  3. António Menezes & José Vieira, 2008. "Training, Job Upgrading, Job Creation and Job Destruction," Atlantic Economic Journal, International Atlantic Economic Society, vol. 36(3), pages 275-292, September. [Downloadable!] (restricted)
  4. Ramirez-Rondán Nelson, 2007. "Nonlinear Volatility Effects on Growth in Developing Economies," Working Papers 2007-016, Banco Central de Reserva del Perú. [Downloadable!]
  5. Gadi Barlevy, 2000. "Evaluating the Costs of Business Cycles in Models of Endogenous Growth," Discussion Papers 1287, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  6. Gadi Barlevy, 2004. "On the Timing of Innovation in Stochastic Schumpeterian Growth Models," NBER Working Papers 10741, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Kerschbamer, Rudolf & Tournas, Yanni, 2000. "In-House Competition, Organizational Slack and the Business Cycle," CEPR Discussion Papers 2557, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  8. Bettina Peters, 2005. "Persistence of Innovation: Stylised Facts and Panel Data Evidence," Development and Comp Systems 0511021, EconWPA. [Downloadable!]
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  9. Heger, Diana, 2004. "The Link Between Firms? Innovation Decision and the Business Cycle : An Empirical Analysis," ZEW Discussion Papers 04-85, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  10. Dimitrios Varvarigos, 2006. "On stabilisation policy: Are there conflicting implications for growth and welfare?," Discussion Paper Series 2006_19, Department of Economics, Loughborough University, revised Jul 2006. [Downloadable!]
  11. Philippe Aghion & George-Marios Angeletos & Abhijit Banerjee & Kalina Manova, 2005. "Volatility and Growth: Credit Constraints and Productivity-Enhancing Investment," NBER Working Papers 11349, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. Gadi Barlevy & Daniel Tsiddon, 2004. "Earnings Inequality and the Business Cycle," NBER Working Papers 10469, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  13. Michelacci, Claudio, 2004. "Cross-Sectional Heterogeneity and the Persistence of Aggregate Fluctuations," CEPR Discussion Papers 4302, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  14. Min Ouyang, 2007. "On the cyclicality of R&D: disaggregated evidence," Working Paper 0707, Federal Reserve Bank of Cleveland. [Downloadable!]
  15. Daniel Giedeman & Paul Isely & Gerald Simons, 2006. "Innovation and the Business Cycle: A Comparison of the U.S. Semiconductor and Automobile Industries," International Advances in Economic Research, Springer, vol. 12(2), pages 277-286, May. [Downloadable!] (restricted)
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